KSH Group in talks with Morgan Stanley, others for Pune asset sale

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Published: July 11, 2019 1:14:45 AM

KSH Infra Industrial Parks is developing the assets on two land parcels in Chakan and Talegaon in Pune, measuring a total of 66 acres.

The Chakan property is close to 1.27 million square feet while that of Talegaon is close to 0.40 million square feet

KSH Infra Industrial Parks, a special purpose vehicle belonging to the logistics and infrastructure player KS Hegde Group, is developing 1.6 million square feet industrial and warehousing assets in Pune, for which it is talking to more than three financial investors including Morgan Stanley for a 100% exit, according to the firm’s managing director Rohit Hegde.

KSH Infra Industrial Parks is developing the assets on two land parcels in Chakan and Talegaon in Pune, measuring a total of 66 acres.

“We are talking to more than three financial investors at this point in time. Morgan Stanley is definitely one of the names. In the next three to six months we are likely to close the forward sale transaction which will involve a 100% exit,” he told FE over phone.

Hegde explained that the group builds its project based on an SPV model, meaning every project is under a different entity. Once the property is built, the group sells its stake to a financial institution or a Real Estate Investment Trust (REIT).

Meanwhile, the constructed property is also leased out to clients. The lock-in period for the leases is about 3-5 years, and the leases are typically for a period of 10 years.

Hegde told FE that the work on KSH Infra Industrial Parks commenced in May 2019, and by early 2021 it is expected to be fully leased out.

“We are talking to some clients right now for leasing out our properties and believe our finished buildings will hit the market in the middle of next year. In the Chakan property, we have five buildings and in Talegaon we have three buildings. The Chakan property is close to 1.27 million square feet while that of Talegaon is close to 0.40 million square feet,” he said.

Some of the group’s previous clients include Kawasaki, Bosch, Renault Nissan, Faurecia, and Jabil.

In February this year, the group had announced that one of its entities— KSH Infra —sold a significant majority stake to an investment fund managed by the Morgan Stanley Real Estate Investing (MSREI), the global private real estate investment management arm of Morgan Stanley Investment Management. The deal was reported to be a $50-million transaction.

The group is now actively looking at land acquisitions in the Mumbai market as well. “We are looking at Bhiwandi, Panvel and JNPT. Our ticket size in Mumbai would be between 1.2-2 million square feet. The biggest challenge for us is the acquisition of land. It is a pretty tough market to crack. Just to get a clear title land is a big problem there. We are looking at Bengaluru also. Our overall plan is to build close to 10 million square feet in two or three key micro markets,” Hegde said.

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